Think long term: What should your portfolio look like in 2020?

At the height of the real estate boom, it would probably be fair to say that far too many people invested in short time scales without giving sufficient consideration to tax, finance, cashflow, underlying demand and an exit strategy.

Just because prices are a lot lower now doesn´t mean the same mistakes can be effortlessly avoided. You still have to make an effort. How can one avoid falling into these traps again?

Anybody fortunate enough to be acquainted with financially successful people will probably agree that they are unlikely to invest their hard earned income without a long term plan in place. 

If they wanted to retire in 20 years time, you can be sure they had a 20 year plan in place (or at least multiple 5 year plans). It´s also likely they have a firm control of their cashflow and stick to a set of basic investment rules before committing to anything.

What are these basic rules? Torcana certainly won´t pretend to know all the secrets, but we do have some guidelines that all serious long term buyers should follow.

Short term investing is for gamblers. Very few people can do this successfully. Purchasing something with a long term view is far more likely to yield profits. Think about where you want to be in 8-10 years time, and invest with that in mind. 

High quality assets attract a premium at purchase and resale. If you want something to generate a long term and reliable income with a minimum of headaches, then be prepared to pay a little extra for a better location, a larger property, good facilities and a well run management company. The additional cost will pay for itself many times over in the long run.

Stay away from gimmicks - the best deals don´t have them. Examples include "guaranteed" rentals, overly generous payment terms, a new golf course or airport on the way etc. 

Ask yourself a simple question: where do people want to live? Stick to the fundamentals such as location, average income, build quality, the financial health of the development/developer and proximity to high quality schools and employers.

Where do you want to be in 2020?

Always have an exit strategy. Think very carefully about who you can sell to in 8-10 years time. It is far safer to purchase in areas where locals rent and buy, as tourist markets are notoriously fickle and prone to bubbles. 

All of the properties I buy (and help others buy) is sourced are with long time frames in mind. I firmly believe that it is the decisions we make now that will determine how wealthy we will be in 2020, not those we make in 4 or 5 years time.

Happy investing.